A British mining company is flooding the market with 27 billion penny shares to avoid going broke

REUTERS/Dado Ruvic Lonmin, the platinum miner, is trying to sell £270 million ($407 million) worth of shares for a penny each, as it bids to avoid collapse.

The rights issue has been launched to try and stop the company, which is being crushed by the slumping price of platinum, running out of cash.

At one point, Lonmin's shares were a big success story. In 2010, they peaked at around £20 ($30) per share, but have been tanking ever since. Shares are down by more than 99% since peak, with 90% of that value disappearing in 2015 alone.

Furthermore, Lonmin is haemorrhaging money on its balance sheet. In September, the miner announced pre-tax losses of £1.46 billion ($2.2 billion) for the year so far, and net debt has risen from £19 million ($29 million) in the same period last year to £123 million ($185 million) in 2015.

All shareholders in the company will be able to buy 46 of the new 1p shares for every share they currently own at a discount equivalent to around 94%. In total, if the issue sells out, there will be around 27 billion new Lonmin shares in the market, according to the company.

In a statement on Monday morning, Lonmin's chairman Brian Beamish said the shares were being issued "in order to be able to deal effectively with the effects of a continuation of current low [platinum] prices."

The move is just another sign of how badly the mining and commodities industry is struggling right now. Prices for most commodities have crashed in the past five years. Bloomberg's Commodities Index is down by more than 50% since mid-2011, with platinum falling by roughly the same amount.